HP reports first increase in PC sales since 2022, tops revenue estimates

New York - HP reported quarterly revenue that topped analysts’ estimates, including the first increase in personal computer sales in two years, an optimistic signal for a long-awaited rebound in the market.

Revenue from HP’s computer unit increased 3 per cent to US$8.4 billion (S$11.4 billion) in the fiscal second quarter, compared with the US$8.3 billion expected by analysts. The business had been declining since May 2022 on a year-on-year basis.

The jump was due to commercial sales, which rose 6 per cent to US$6.2 billion. Consumer sales continued to decline, slipping 3 per cent to US$2.2 billion, the company said on May 29.

The PC market had seen a historic decline over the last two years after many consumers, businesses and schools purchased laptops in the early months of the Covid-19 pandemic.

In the first quarter, shipments picked up 1.5 per cent – the first increase since the end of 2021 – industry analyst IDC said in April.

PC makers have been hopeful those numbers signalled the end of the slump and that growth will accelerate in 2024 with the launch of machines equipped with a new version of Microsoft’s Windows software, as well as hardware equipped with chips to handle artificial intelligence (AI) tools.

AI PCs, such as those HP unveiled last week during a Microsoft conference, will be about 10 per cent of total shipments in the second half of 2024, chief executive Enrique Lores said.

The financial impact will be “much more relevant” in 2025 and 2026 as HP expects the number to climb to about 50 per cent of shipments three years after launch, he added.

The shares were little changed in extended trading after closing at US$32.80 in New York.

The stock has gained 9 per cent in 2024 – falling short of peer Dell Technologies, which has more than doubled in value in 2024 due to its excitement for its AI-capable servers.

HP has failed to receive any similar “AI pixie dust” to boost its valuation, though the adoption of the new AI PCs could change that, wrote Sanford C Bernstein analyst Toni Sacconaghi before the results were released.

IDC analyst Jitesh Ubrani said in April: “Along with growth in shipments, AI PCs are also expected to carry higher price tags, providing further opportunity for PC and component makers.”

In the period ended April 30, total sales declined less than 1 per cent to US$12.8 billion, compared with analysts’ average projection of US$12.6 billion.

Profit, excluding some items, was US$0.82 a share, about in line with Wall Street estimates.

Sales in HP’s printing business fell 8 per cent to US$4.4 billion. The company introduced a subscription plan for printers earlier in 2024, which Mr Lores said has been seeing success. A similar plan for consumer-oriented computers is being explored, he added.

For the fiscal third quarter, HP projected profit, excluding some items, of US$0.78 to US$0.92 per share. Analysts, on average, estimated US$0.85, according to data compiled by Bloomberg.

BLOOMBERG